Tesla shares keep rising after news about dealership battle and more

Tesla shares are still zooming ahead, a day after they rose almost 9 percent in their highest one-day jump in four months. Shares in the Palo Alto electric-car maker are up nearly 4 percent, to $233.28, as of this post.

The positive news partly driving the stock surge comes by way of New Jersey, where the state Assembly passed a bill Monday that would allow Tesla and other electric-vehicle makers to sell cars in the state without going through dealerships. Auto dealerships had raised a big stink about Tesla selling cars at its own stores (which it does everywhere it sells cars). Tesla was ordered to stop selling cars at its two New Jersey stores in April.

“We firmly believe that the bill sends the right message to innovators and entrepreneurs that New Jersey will not be an obstacle when creating, building or promoting and selling new products and services,” said John Galandak, the state’s Commerce and Industry Association president, according to the Star-Ledger. The bill, A3216, now goes to the state Senate.

Tesla also is facing direct-sales issues in other states.

Monday, Tesla shares rose after news that it may work with BMW and Nissan on EV technology, as Mr. Biz Break mentioned. The company also sent those with Model X reservations an update: It will begin production of the cross-over vehicles in early 2015.


Photo: Guests check out Tesla vehicles at a car handover ceremony in Shanghai on April 23, 2014. (AFP/Getty Images)


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  • RegularGuy55

    The main reason automobile manufacturers sell through dealerships goes W-A-Y back to the state of product liability laws in the early days of carmaking.

    Back then, a consumer could only sue the direct seller for negligence in product liability. The term is ‘privity of contract.’ If a someone was injured or killed because of a manufacturing defect in a car, they could only sue the dealer which sold it to them, not the company who built the defective product. A large judgment would wipe out a dealership, leaving the injured person without compensation.

    Automobile companies knew this, and decided to sell cars through dealers to insulate themselves from lawsuits. It was NY Appellate Court Judge Cardozo who first ruled that an injured consumer could sue a manufacturer for a defective product.

    So, based on its original purpose, the dealership model really is outdated.